Business

ERC Window Closing Soon (Or Maybe It Will Close Retroactively!)

Ohh Nooo!! The Employee Retention Credit ("ERC") offered tax credits of 50% - 70% of your payroll costs during the COVID-19 Pandemic, but the time to claim the credit is running short, and, surprise! Congress is trying to slam the refund window shut much sooner than expected.

Current Law: Businesses could still claim the credit for wages paid between March 13 and Dec. 31, 2020, until April 15, 2024. And for wages paid between Jan. 1, 2021, and Sept. 30, 2021, the existing deadline is April 15, 2025.

Pending Change: A proposal just voted out of the Ways and Means Committee would shorten the deadline to file all claims for the ERC to Jan. 31, 2024, for eligible wages paid during 2020 and 2021.

I know what you're saying: never gonna happen, this Congress couldn't legislate its way out of a paper bag. But consider this: it came out of committee on a bipartisan basis, 40 - 3. It might happen.

UPDATE 3/30/24: The House passed this bill, and the Senate has begun considering it. Should you file for the ERC? We just don't know. If the application window closes retroactively, you lose the cost of filing. If it doesn't, you could win a big refund. Ask your accountant for a rough estimate of the prospective refund before you decide.

Starting a Business: A Guide to Planning and Requirements

Planning Chart
So you've got a great business idea? That's awesome! But before you can start selling your products or services, there are a few things you should do to get your business off the ground.

Are You a One Man Band?

If you are self-employed, and you have no employees, you are about to lose an incredible opportunity.

I, like many, was not a big fan of the Paycheck Protection Program (“PPP”), a stimulus program designed to fund payroll and rent for 8 weeks during the COVID pandemic. It didn’t seem to apply to many home-based businesses that did not have payroll and rent. And for businesses with payroll, qualifying for loan forgiveness seemed too complicated.

Recent developments, however, have made PPP extraordinarily attractive to self-employed individuals with no employees, and qualifying for forgiveness of the entire loan amount is very easy.

NY Farmer Tax Credit: Food Pantry Donations

Beginning in 2018, New York is allowing farmers a tax credit of up to $5,000, based on 25% of fair market value, for qualified food donations to food pantries.

Reality Check

Before you rush off the the local farmers' market to score your tax credit (you know you're thinking about it), there are definitions of eligible farmer, qualified donation, and eligible food pantry that must be met.

Corp Rates Slashed, So Why Are Taxes Going Up?

Pickpocket You may have heard about the dramatic cuts to corporate tax rates under the Tax Cuts and Jobs Act: top rates slashed from 35% to 21%.

Wow!

But guess what? Many smaller corporations were not paying taxes based on the top rates, and for many of them the new law brings an increase in their taxes, in some cases as much as a 40% increase.

Tax Complexity? Bring It On!

Newman Poster Lately, I keep thinking about a scene in an early Paul Newman film.

“The Young Philadelphians” (1959), had romance, betrayal, high society, blind ambition, war, and for good measure, a murder trial.

Of course, I remember none of that. NJ company

In the one and only scene that I do remember ...

A tax attorney (Paul Newman) gets a lucky break. Forced to work over the Christmas holiday, he is available when the very rich Mrs. J. Arthur Allen (Billie Burke) needs her will amended. With his specialized knowledge, he shows her how to avoid paying a great deal of taxes. His suggestion–

NY Annual Notice of Pay Rates Repealed

WTPA Amended: Costly Annual Pay Rate Notice Repealed 12/29/14. Notice at hire still required, penalties increased.

Update: On December 29, 2014, Governor Cuomo signed a bill eliminating the requirement that before February 1 of each year, employers notify and receive written acknowledgement from every worker about their rate of pay, allowances, pay day, etc. Pending resolution of the amendment's effective date, NYS DOL will not require annual statements in 2015.

Please note, businesses are still required to notify employees as required at the time of hire.

The Un-noticed Tax Credit for Small Employers, Including Nonprofits

You know the tax code is too complicated when large numbers of employers fail to claim tax credits to which they are entitled.

So it is with the credit for small employer health insurance premiums.